I want to put some money away for my children's future. And I want this money to be used for very specific purposes like my children's college education or other live events like having their own children, getting married, etc. I want to set it up with very specific guidelines to limit how they can use the money and when.
How I was doing it before?

In the past I was saving money in different ways. I had some equity I could tap into, I had the 401k that could be used for a few things and I had some savings accounts.

What when wrong?

The house, the 401k, the saving accounts, all went down the drain during a divorce (or any other life event). I now have close to nothing and I'm not saving sh1t because I fear the same thing might happen again. Either that or God knows what.

So my questions are:

Anybody around here has any experience with setting a trust fund for your kids? Any experience in making it divorce proof? Once you set it up, can you add more money to it later (monthly maybe?)? Can this be some sort of investment account that I could manage/invest as I see fit?

I want this primarily for my children's college expenses. I have 2 kids. I want them to use it 50% and 50%. But let's say the boy quits college or never goes, while the girl goes in for the BA and keeps going for the masters or even something higher. Then I would like the girl to use the funds that were initially allocated for the boy (or some). And if there is some money left, I would like them to get it, after a certain age (like after 30 or something like that).

And I also want this to be future proof. If I divorce and later have more kids with a different woman, I want those kids to have equal rights to the trust funds, with equal rules.

Any info would be appreciated... thx

MillCreek

02-11-09 11:47 PM

You need to sit down with an estate planning lawyer. They do this sort of thing all the time.

BengeBoy

02-12-09 12:00 AM

A simple way to get started: You might consider starting with a 529 college savings plan for your kids.

It's held in your name, not theirs. Money accumulates tax-free. If one of the kids gets a big scholarship or otherwise doesn't need the money, you can direct it to another kid. You direct how the money is invested.

Once you have their college fully funded, you might consider the trust idea. Trusts are more expensive to set up, worth considering if you have a lot of $$ to put away for them.

You have some other questions that maybe an estate planning lawyer can help with, as suggested.

Seconded on an estate lawyer. It costs money but it is NOT in your or your wife's name. The lawyer oversees the account until the kid is an age you choose (21 for me) and they write all the checks. They interpret the document you write, so be CLEAR. For example, we were just in a little puzzle wondering if my fund covered off-campus housing or not, because my grandmother was not explicit enough (my lawyer sided with the state's view that off-campus board IS included in a normal college experience).

Again, though, it will cost a fee, I'm not sure what the continual fee is, but at least it's not in your name. Try to get an estate lawyer who is not easily pestered. For example, if you call three times in a week the lawyer should not get angry. Everything will be fine and dandy regardless until your kid goes to school, then you'll have many questions and bills to be signed, which may annoy a bad lawyer.

Siu Blue Wind

02-12-09 05:56 AM

In Cali it's called the Cugma acct. Google.

Little Darwin

02-12-09 07:06 AM

You probably are set in your direction, but just some food for thought...

I think the best thing you can do for your children is to make sure that they don't have to look out for you in your old age.

The thing to do is to not waste a dollar trying to look out for their future, but spend your resources and effort looking out for yours.

Zaneluke

02-12-09 07:11 AM

I have a college saving plan set up for my son. And a 529 for the younger one.

RubenX

02-12-09 08:12 AM

Quote:

Originally Posted by lauren
(Post 8347756)

Smart grandma. My grandfather gave me money that was supposed to pay for college but my parents used it to buy a house and I never saw a penny.

Exactly the kind of thing I want to prevent. I'm liking this trust thingie lots...

RubenX

02-12-09 08:15 AM

Quote:

Originally Posted by Little Darwin
(Post 8347660)

You probably are set in your direction, but just some food for thought...

I think the best thing you can do for your children is to make sure that they don't have to look out for you in your old age.

The thing to do is to not waste a dollar trying to look out for their future, but spend your resources and effort looking out for yours.

I keep that in mind at all times, it is great advice. Kinda complicated at the moment, but not forgotten.

SpongeDad

02-12-09 08:52 AM

Quote:

Originally Posted by Little Darwin
(Post 8347660)

You probably are set in your direction, but just some food for thought...

I think the best thing you can do for your children is to make sure that they don't have to look out for you in your old age.

The thing to do is to not waste a dollar trying to look out for their future, but spend your resources and effort looking out for yours.

As my advisor put it - someone will loan your kids the money to go to school, but not for you to retire. Take care of retirement plan first, then move to things like 529 programs.

As an example, I save about 12-15% of my pretax income for retirement, and have the 529's set up to pay for about 60-70% of college for my kids. Then comes bike schwag. It would take a lot more money for me to get through bike schwag and have enough left over to make setting up trusts worthwhile.

Note - if your talking about a trust that's filled with you life insurance proceeds should you turf, that's a different question and really does need a trust and estates lawyer involved.

mooxster

02-12-09 09:22 AM

Quote:

Originally Posted by RubenX
(Post 8347870)

I keep that in mind at all times, it is great advice. Kinda complicated at the moment, but not forgotten.

not complicated. Term life insurance can be fairly cheep. If you have a family that depends on you and your income you should have one anyways

apclassic9

02-12-09 09:51 AM

talk to an estate planner... but, also check the laws in your state about trusts vs gifts to minors, who's ssn the account is held in, etc. It should be easy enough to protect from you wife by putting the funds in your kid's ssn's, but then you have to protect it from your kids!!

enine

02-12-09 12:00 PM

I was going to say do the 529 plan as well. Unless you have a lot of $$$ to make the whole estate lawyer worth it the 529 plan you can just deposit a bit each pay and let it grow with just minor annual fees. The cost of laywers and estate paperwork is going to tie up a lot of $.
The stock market is low now too so starting a 529plan is a good time since it will be investing while prices are low.

JF1

02-12-09 12:43 PM

Quote:

Originally Posted by SpongeDad
(Post 8348009)

As my advisor put it - someone will loan your kids the money to go to school, but not for you to retire. Take care of retirement plan first, then move to things like 529 programs.

As an example, I save about 12-15% of my pretax income for retirement, and have the 529's set up to pay for about 60-70% of college for my kids. Then comes bike schwag. It would take a lot more money for me to get through bike schwag and have enough left over to make setting up trusts worthwhile.

Note - if your talking about a trust that's filled with you life insurance proceeds should you turf, that's a different question and really does need a trust and estates lawyer involved.

That's just about exactly like I have it as that is the same advice I got. 13% pretax income goes towards my retirement. A small percentage goes towards Savings Bonds that will be used tax free for my daughter's education and I also have savings accounts set up in each girls names where a certain amount goes directly into theirs from my paychecks like direct deposit. Beyond that, whatever they need for school will be through loans which I can help payoff when they are done.

bikingshearer

02-12-09 01:05 PM

Quote:

Originally Posted by MillCreek
(Post 8347314)

You need to sit down with an estate planning lawyer. They do this sort of thing all the time.

Some of the other advice in this thread is good. This advice ^^^ is spot-on. You have multiple moving parts here: you want the money to be for your kids' education, but you want to maintain some flexibility as to how it is disbursed; you want to make sure the fund can't be co-opted by a divorced spouse (not sure from what you are saying if you are concerned about a current spouse or a potential future one - it may or may not make a difference); you want the fund to be administered under your desired guidelines even of you get hit by a bus (which also means you better have someone you can trust to take over as trustee if you kick the bucket); if possible, you want to do this in a way that provides tax advatages (I don't know if that can be done while meeting your other needs, but if it can, so much the better).

With the possible exception of reducing your tax burden, all of these things can be accomplished, but it is not a job for an amateur. It is entirely possible there is another strategy entirely that would be best for you. Even if the trust strategy or the 529 account makes the most sense, there are enough factors involved - and the "gotta get it right" factor is very high - that makes me think that you really want the Pros From Dover to look this over and advise you.

Yes, I am a lawyer, and no, I am not shilling for my fellow lawyers. I have turned many people on to the self-help materials out there in matters where it does not make sense to spend the money for a lawyer. I've done it here on BF and I've done it many times with people who have asked if I can help them (I am not in business to take money from people who can and are willing to do it themselves). This is not one of those times. Talk to several lawyers. Do this right. It is worth the investment.

HardyWeinberg

02-12-09 05:19 PM

You need a lawyer for sure. Are you talking about a trust to dispose of an estate should you and your wife kakk before they start school? An estate lawyer will help you set that up so the name of the trust exists but it's not funded until your estate is dumped into it. You will need to designate a trustee who will disburse it for the appropriate expenses.

If you're talking about hiding money from people who may get access to the $$ in question whether or not you die yourself... well, you need to talk to a lawyer.

ilikebikes

02-12-09 05:48 PM

RubenX, PM sent :thumb:

RubenX

02-12-09 07:56 PM

Thx for all the info...

I'm not interested in hiding any money. My goal is to protect that money from my wife's psychotic episodes, my kids themselves and any other unexpected things that life might throw @ us.

About retirement... that's something else...

I do recognize that the 401k is a good thing. And I AM putting some money into it, enough to get full advantage of my employer's match. But I have to be real, I AM NOT going to benefit from the 401k. In fact I would be better off by getting that money taxed, and sending it to my sister to put it on an investment account in her name. 401k's have one fatal flaw: your spouse gets half of it after divorce. So, that employer's in not really for ya.... unless you are one of the FEW that gets old and dies without ever divorcing your spouse.... statistical data is against you tho.

RubenX

02-12-09 08:15 PM

Quote:

Originally Posted by lauren
(Post 8351726)

It won't help you now, but there is a cure for this:Pre-nup

I won't get married without one, and the boyfriend has about a normal level of sanity.

+ Infinity...

Too bad I don't have one. I was coerced tho... with my son as hostage, but that's another story.

Tinuz

02-12-09 10:10 PM

Quote:

Originally Posted by lauren
(Post 8351726)

It won't help you now, but there is a cure for this:
Pre-nup

I won't get married without one, and the boyfriend has about a normal level of sanity.

Too bad many people still see this as a lack of trust.....

For me it is the same....I saw my parents divorce and the crap that ensued....I am still paying the bills (literally, mostly).